Nearly 10M fewer cars built this year due to semiconductor shortage

Nearly 10 million fewer cars were built this year due to supply chain issues and a semiconductor shortage, analysts say, Report informs referring to The Telegraph.

Research by market intelligence group LMC Automotive estimated a 9.6 million global shortfall in the number of light vehicles produced through 2021. European carmakers are expected to have suffered the biggest hit, producing 3 million fewer vehicles as they struggled to get hold of supplies.

Semiconductors have been one of the biggest pain points in global supply chains, with delays, production disruption and hoarding spurred by the Covid-19 pandemic leading to a severe shortage.

The crisis is still running, LMC said, with the situation for car makers unlikely to substantially improve until the second half of 2022, and the gulf between chip demand and supply taking until 2023 to close.

Justin Cox, the group’s head of global production, said the outlook had improved slightly in recent weeks as emergency measures boosted production.

“I think the auto industry itself is beginning to mitigate some of the problems within the supply chain a bit better,” he said. “Some of the things that they put in place early on in the crisis are starting to seep through.”

Steps taken to mitigate the shortage of chips, added Cox, included reducing the number of devices per vehicle. Modern vehicles use hundreds, and sometimes thousands, of semiconductors.

Many have also modernized their inventory management systems to build resilience against future disruptions.

“[Manufacturers] do not want to get caught out like this again,” said Cox.

Overall, light vehicles production is expected to reach 84.9 million units this year, a 12 percent increase compared with 2020 – when widespread lockdowns shut down production and sales around the world.